Not-for-Profit Hospitals' Community Spending Detailed

Not-for-profit hospitals average more than 11% of total expenses on benefits to their communities, according to a study sponsored by the American Hospital Association.

Beginning in 2009, the Internal Revenue Service required not-for-profit hospitals to file a Schedule H form to assess their community benefit. AHA hired Ernst & Young to collect and analyze the data from 571 not-for-profit hospitals.

The report found that free care, financial assistance and spending to fill gaps in Medicare underpayments average 5.7% of total hospital expenses. The report compared hospitals of similar size so that communities can better understand their hospitals’ benefit to their community. Other benefits included community health improvement programs, health research and education, and other subsidized services, the study found.

AHA President/CEO Rich Umbdenstock said in the report that Schedule H helps communities to better understand how they are served by their local hospitals.

"This means that a hospital that reported $100 million in total expenses to the IRS spent an average of more than $11 million on benefits to the community, nearly $6 million of which was directly devoted to patients in financial need," Umbdenstock said. "The AHA believes that communities themselves are in the best position to determine whether the benefits provided by their local hospitals match their needs."

Although AHA supports Schedule H, Umbdenstock said it has "limitations," and cannot substitute for direct community assessment. "The AHA believes that communities themselves are in the best position to determine whether the benefits provided by their local hospitals match their needs and aspirations," he said.

bob (2/14/2012 at 1:19 PM)
Rich Umdenstock is so right when he suggests that each community is better than the IRS in determining how much not-for-profit hospitals actually benefit them. A recent Ernst & Young survey shows that most of what IRS counts as community benefit has little or nothing to do with benefiting any specific community, including health research and education, filling gaps in Medicare "underpayments", and even charity care. Generally, none of these activities are the responsibility of a hospital's community benefit program, or are identified with any specific community improvement.